What Happens to Our Estate When We Die?

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estate-law

When a person dies, everything they have left is their “estate.”  Every person has an estate. It may be just clothing, furniture and household items (collectively known as “personal property”), or it can be more complex if they owned a house, vehicles, financial assets or a business.

The process of gathering the assets, paying the deceased person’s debts and transferring ownership of assets is known as estate administration.  There is always some work to be done after a person passes away.  Estate administration may be completed by the court supervised process known as probate, or outside of that court process – non-probate.

During probate, the court appoints someone to act as the personal representative; this may be an individual person or a business that provides estate administration services.  The personal representative is a fiduciary, responsible for collecting all the deceased persons property and assets, then prepare an inventory that values the assets, paying all the outstanding debts, and then distributing the remaining assets to the deceased person’s heirs.  The personal representative may have to sell the assets to pay debts.  At the end of probate, the personal representative lets the court know that the estate has been completely administered, all bills and taxes paid, and assets distributed, then the probate is finished.

If the deceased person had a will, the will tells the court who should be named as personal representative, who should inherit the remaining assets at the end of probate and any other specific wishes of the person who died.  If the deceased person did not have a will, state laws have a default plan for who inherits the property.

Not all estates go through probate.  A community property agreement may pass assets from one spouse to the other after the first spouse dies.  Retirement plans, bank accounts, and life insurance polices have beneficiary designations that automatically pass those assets to the named beneficiaries. Living trusts may continue or terminate depending on the specific terms of the trust agreement.  More states now also have transfer on death deeds that allow a person to leave their real estate to a named beneficiary without requiring probate.  Even with these non-probate transfers though, there is still estate administration to be done. Death certificates need to be provided to show that the person passed away and the beneficiary is the new owner. The deceased person’s name should be removed from all accounts and deeds.

If the estate is very small, most states have a small estate affidavit process where an authorized person can claim the deceased persons assets below a certain dollar amount by swearing that they are an authorized heir entitled to the assets.

Gravis Law provides legal services in Washington, Montana, Michigan, Idaho, and Florida. We’ve helped clients navigate the complexities of estate administration of all types. Let us make law uncomplicated by providing answers to your questions and legal services to help you accomplish your goals. Contact us for more information.

About the author: Stella Edens Pederson, Managing Attorney in Richland, WA

Stella Edens Pederson has been an Estate Planning attorney in Washington State for 24 years.  Starting out as an entrepreneurial solo practitioner in Seattle’s Belltown neighborhood, she later joined a firm in Kennewick, Washington, where she practiced for 19 years.  During that time, she was firm manager for four years, president of many legal and professional organizations, and was part of a team that established a two-year mentorship program for younger professional women.